Lego Mindstorms NXT

Powered by Customers’ Inventiveness

LEGO® MINDSTORMS™ has been Lego’s highest revenue producing product. It was developed (and enhanced) by Lego’s customers.

Lego Mindstorms is a classic example of outside innovation. Lego’s Mindstorms’ robotics kit was based on inventions developed by “lead users” at MIT and Tufts University, who in turn worked with teachers and kids in their classrooms. As soon as the product hit the market, adult customers began hacking and extending the product—a behavior which Lego monitored and encouraged.

When LEGO was ready to develop its next generation product, they invited these lead customers to co-design the next-generation product with them.

LEGO® EXECUTIVE SUMMARY

LEGO® Group/International Toy Manufacturer:

The LEGO Group is one of the world’s largest toy manufacturers and the largest in construction toys. It is estimated that the world’s children spend five billion hours a year playing with Lego bricks.

Lego is making a come back after some missteps. Engaging customers as co-designers and consultants has been part of the secret of Lego’s success.

Case Study Focus:

1) How to commercialize lead user innovations.

2) How to nurture and leverage online communities for new ideas and to build customer loyalty.

3) How to partner with lead customers and their partners to develop a next-generation product.

4) How to engage lead customers in the design of next-generation products.

Target Customers:

Lego targets three different customer segments for its MINDSTORMS(TM) product line: families (children and parents), educators, and hackers/hobbyists

Business Results:

In 2005, the LEGO Group went from a loss of €226 million in 2004 on revenues of €847 to a profit of €94 million on revenues of €945 million.

Lego Mindstorms has been the company’s best-selling product for more than eight years. The new version, Mindstorms NXT is forecast to be a best seller.

*****

In late April 2006, thousands of LEGO® MINDSTORMS™ fans will flock to the Olympic stadium in Atlanta, Georgia, to witness the world finals of the FIRST Lego League. Teams of 9- to 14-year-old kids from all over the world will compete in an exhilarating four-day event.

Each team’s goal: to program a Lego Mindstorms robot to carry out a complex set of “Ocean Odyssey” missions involving vehicles, objects, and animals, all made out of Lego bricks. The kids’ robots had to take a submarine off of a research vessel, map the ocean floor to detect the presence of a shipwreck (flipping up marker flags as it did so); locate a water pumping station and cover it with a protective structure to keep it from being damaged in the mission; install a new segment of underwater pipeline; sample different species of fish and separate them by color; release a trapped dolphin; move an artificial reef into the correct location; clean up a cargo shipping accident by replacing the debris back into the cargo container and hauling it away; and, finally, recover archaeological artifacts from an ancient shipwreck.

The boys and girls who designed and programmed their robots to carry out all these tasks were the winning teams from local, regional, and national contests held in the fall of 2005. More than 84,000 kids in 35 countries participated in the robotics contests, with more than 30,000 adult volunteers supporting them. Each of the children who participate in the Atlanta games will come away with unforgettable memories, a medal, and a sense of accomplishment. They will have mastered physics, engineering, and computer programming, as well as game strategy and logic in order to compete with their peers from around the world.

A large Lego convention will be held at the same time as the kids’ competition, drawing thousands more AFOLs (Adult Friends of Lego). The annual BrickSouth convention will feature booths crammed with customer-created Lego designs. Each person brought his or her own prize creation. These will be joined together by theme into large Lego landscapes, including a moonbase, towns and trains, castles, a Gotham City complete with Batman, and a large collection of Mindstorms robots at work and at play.

Lego products provide a great metaphor for customer-led innovation. The company has provided building kits to fuel kids’ (and adults’) inventiveness for more than 50 years. But the most interesting story about Lego’s recent turnaround is the extent to which ...